Y. R. MEENA, J. ( 1 ) ON an application under Section 256 (2) of the Income-tax Act, 1961, this court has directed the Tribunal to refer the following questions set out at page 2 of the paper book for the opinion of this court;"1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee's claim was not allowable under Section 28 of the Income-tax Act, 1961, being deductible business loss in the year under reference ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in rejecting the assessee's claim for deduction of the sum of Rs. 1,76,751 as a bad debt ?"in compliance with the direction of this court the Tribunal has referred the aforesaid questions along with the statement of case. ( 2 ) THE assessee is a private limited company carrying on the business as tea brokers, auctioneers and financiers. During the year ended March 31, 1982, relevant to the assessment year 1982-83, the assessee has debited an amount of Rs. 1,76,751 in the account as "irrecoverable advances written off. " The above debit had arisen out of Rs. 2 lakhs advanced in the course of business to Shri R. P. Gupta against the required financial accommodation of Rs. 3. 20 lakhs as per agreement dated March 21, 1978. ( 3 ) SHRI Gupta had claimed to be a lessee proprietor of Mullootar Tea Estate and he had promised to sell the entire crop of the tea estate through the asses-see-company. Accordingly, an amount of Rs. 2 lakhs was advanced to Shri Gupta in 1978 in different intalments. However, the sales of tea of the above tea estate effected through the assessee-company was Rs. 23,249 only in May, 1979. After the above date no communication was received by the assessee-company from Shri Gupta. ( 4 ) IT has been alleged by the assessee that Shri Gupta had violated the agreement. A complaint was lodged to the Officer-in-charge, Hare Street Police Station, alleging fraudulent representation against Shri Gupta. A criminal suit was started against Shri Gupta and another in July, 1979, when the assessee felt that no chance is there to secure any business from Shri Gupta nor any amount can be realised from him in spite of the best efforts. A complaint was lodged to the Officer-in-charge, Hare Street Police Station, alleging fraudulent representation against Shri Gupta. A criminal suit was started against Shri Gupta and another in July, 1979, when the assessee felt that no chance is there to secure any business from Shri Gupta nor any amount can be realised from him in spite of the best efforts. Then the assessee contacted the solicitors who advised that a criminal suit should be filed against Shri Gupta. Criminal suit was also filed but even then nothing could be recovered from Shri Gupta. Therefore, that amount was claimed as bad debt in the assessment year 1980-81. The Assessing Officer has rejected the claim of the assessee and that was confirmed up till this court. Holding that as no civil suit was filed for the purpose of recovery of the loan or advances, the chances of recovery of loan are still there. Therefore, this court also held against the assessee in the assessment year 1980-81 in I. T. R. No. 151 of 1991 judgment dated December 17, 1993. ( 5 ) HEARD learned counsel for the parties. The relevant assessment year is 1982-83. The assessee again claimed similar deduction that either the amount should be allowed as bad debt or should be allowed as business loss under Section 28 of the Act. The Tribunal has considered whether the debt has become bad or not in para. 5 of its order which reads as under :"the case of the assessee under Section 36 (1) (vii) has rightly been rejected by the Commissioner of Income-tax (Appeals ). The bad debt can only be allowed if the debt arose in the course of the business of the assessee. The debt has become bad and it has been written off in the books of account of the assessee. The assessee in the course of its business has advanced loans to Shri Gupta against the crop of the tea estate. Therefore, so far as the first condition is concerned, it is duly satisfied. But the second and third conditions are not satisfied at all. The assessee could not prove that the debt became bad during the year under appeal. Shri Gupta may not be the owner of the tea estate but the assessee has not proceeded for the recovery of the debt against Shri Gupta. The assessee had not indicated the assets of him. The assessee could not prove that the debt became bad during the year under appeal. Shri Gupta may not be the owner of the tea estate but the assessee has not proceeded for the recovery of the debt against Shri Gupta. The assessee had not indicated the assets of him. The criminal action has been taken against Shri Gupta because he fraudulently represented himself as the owner of the tea estate. But this does not satisfy the second condition. As the assessee has not produced any material to prove that the debt became bad except the letter of the solicitor, the second condition is not satisfied at all. The assessee has admitted that their condition has not been satisfied. The assessee has not written off the debt in its books of account. The assessee lastly has urged that the direction could be given to the Income-tax Officer to comply with Section 155 (6) of the Act. The debt has not been proved to be bad during the year under appeal or in the earlier year. If the debt would have been bad in the earlier year, some direction could have been given to the Income-tax Officer to rectify the assessment under Section 155 (6) of the Act. That situation did not arise in the present case. Consequently, the disallowance sustained by the Commissioner of Income-tax (Appeals) is maintained. "the loan was advanced in 1978. The assessee for the first time claimed the debt as a bad debt in the assessment year 1980-81. The claim was rejected. Again the assessee has claimed in the year under consideration 1982-83. That has also been rejected up till the Tribunal. It is also brought to our notice by counsel for the assessee that the loan has not been recovered so far. When the consideration in 1982-83 and as on date it is the same and the advance that is treated as loan has not been recovered till today. Why the claim of the assessee as bad debt should not be allowed, we do not find any justification. If the assessee knew it well that filing of the suit would not in any way help the assessee but rather burden the assessee with additional financial expenses. Why the claim of the assessee as bad debt should not be allowed, we do not find any justification. If the assessee knew it well that filing of the suit would not in any way help the assessee but rather burden the assessee with additional financial expenses. If the assessee feels that in spite of the suit, the loan will not be recovered the filing of a civil suit for recovery of debt is not necessary to claim the bad debt. Therefore, in this case the amount should be allowed as bad debt. As we allow the amount of Rs. 1,76,751 as bad debt, therefore, whether it is a business loss or not, the answer to this first question will be of academic interest. ( 6 ) IN the result, we answer question No. 2 in the negative, that is, in favour of the assessee and against the Revenue. ( 7 ) THE reference so made stands disposed of accordingly.